FROM IDEA TO THE OPPORTUNITY

CHAPTER 4
Creativitv and the Business Idea

CHAPTER

Identifying and Analyzing Domestic and International Opportunities

CHAPTER

Protecting the ldea and Other Legal Issues for the Entrepreneur

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TIVITY AND THE BUSINESS IDEA

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FREDERICK W. SMITH
Who would think that an entrepreneur with a $10 million inheritance would need
more capital to get his company off the ground? The business world is filled with stories of companies, large and small, that started in a garage with an initial investment

.-..;.,1,,,

Frederick W. Smith, a Memphis native whose father

'made his fortune by founding a bus compny, conceived of the idea for his air-cargo

. . -.'
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company while studying economics at Yale University in the '1960s. The professor of one
- of Smith's
classes was a staunch supporter of the current system of air freight han:: dling in which a cargo package
literally hitched a ride in any unused space on a passen-

'

'

'

ger flight. Fred Smith saw things differently and, in a paper, described the concept of
' a freight-only airline that would fly all packages to one central point. where they
would then be distributed and flown out again to their destinations. This operation
', could take place

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of a fewhundred dollars. But none of thosecor.npanies needed a nationwide distnibution system in place, complete with a fleet of airplanes and
trucks. before accepting its first order. And none of those
garage start-ups grew to be Federal Express.

:.1,..l:::

r:.: l

.-.

at nght when the airports were less crowded, and, with proper logistics control. the packages could be delivered the next day. Whether it was the novelty
of the idea, the fact that it went against the professor's theories, or the fact that it was

written in one night and was turned n late, the first public display of Smith's grand
idga earned him a

C.

Smith's idea constituted far more than a concept for a creative term pape[ however.

.
' " , ..t. ' He had seen how the technological base of the country was changing. More companes were

-::' '.

becoming involved in the production and use of small, expensive items such
and Smith was convinced that businesses could use his air-cargo idea to

as computers,

.control their inventory costs. Overnight delivery from a single distribution centerto
dr'lywhere n the country could satisfy customersl needs without a (ompany needing a
duplicate
investment in inventory to be stored in regional warehouses. Smith even
.-

,, .

PART

FROM IDEATOTHEOPPORruNffY

After nearly four years of service and 200 ground support missons as a pilot, he left
Vietnam, ready to start building something. He went to work with his stepfather; first
managing and subsequently purchasing a controlling interest in Arkansas Aviation
sales, a struggling aircraft modificaton and overhaul shop. Difficulty in getting parts
to the shop in Little Rock. Arkansas, revived his interest in the air-cargo concept. He
commissioned two feasibility studies, both of which returned favorable results based
on a high initial investment. The keyto this company would be its ability to serve a
large segment of the business community from the very beginning. and the key to the
required level of service was cash. Full of optimism, smith went to chicago and New

York, confident that he would be returning with basket loads of investment checks.
Progress turned out to be slower than Smith had anticipated. but through his boundless energy, belief in his idea, and technical knowledge of the air-freight field, he was
finally able to get enthusiastic backing (around $5 million in capital) from New Court
Securities, a Manhattan-based, Rothschild-backed venture-capital investment bank.
This commitment from New Court spurred substantial additional financing. Five other

institutions, including General Dynamics and citicorp Venture capital, Ltd., got involved,
and Smith went back to Memphis with 972 million. This was the largest venturecapital start-up deal in the history of American business.
Federal Express took to the skies on March 12,'1973, to test its service. Servicing an
11-city network (extending from Dallas to Cincinnati). it initially shipped only six packages. on the night of April 17, the official start-up of Federal Express, the network had
been expanded to include 25 cities (from Rochester. New york, to Miami, Florida), shipping a total of 186 packages. Volume picked up rapidly and service was expanded; it

looked

though Federal Express was a true overnight success- 5mith's understanding

of a market need had been accurate. but he had not counted on opEC causing a massive inflation of fuel costs just as his company was getting started. By mid-1974, the
as

company was losing more than $1 million a month. His investors were not willing to
keep the company going, and his relatives were suing him for mismanaging the family

fortune (nearly $10 million of Smith money had been invested). But Smith never lost
faith in his idea and finally won enough converts in the investment cornmunity to keep
the doors open long enough to straighten out the pricing problems caused by opEC.

After losing $27 million in the first two years, Federal

Express

turned a profit of

$3.6 million in 1976. The development and growth of Federal Express were tightly regulated. Because of old laws designed to protect the early pioneers of the passenger air-

line industry, Smith was required to obtain approval for operating any aircraft with a
payload in excess of 7,500 pounds. since the major airlines-at the time, the giants of
the industry-were not ready to share the cargo market, he was not able to obtain this
needed approval and had to operate a fleet of small Falcon jets instead. While this situation worked well at start-up, by 1977 his operation had reached the capacity of
these smaller planes. since the company was already flying severaljets on the most active routes, it did not make sense to buy more Falcons. Smith took his salesmanship to
washington and, with the help of a grassroots Federal Express employee effort, was

able to obtain legislation creating a new class of all-cargo carriers. This gave Smith the
operating latitude he needed.

CHAPTER

CREATIVITY AND THE BUSINESS

IDEA

95

Although Srnith had the approval to operate large jets, he needed to find a way to
purchase them. The corporate balance sheet of the company was still
a mess from early
losses, and the long-suffering early investors needed some reward. Thus,
Smith took his
company public on April 12, 1978, raising enough money to purchase used Boeing 727s
from ailing passengr airlines. The investors were indeed richly rewarded, with

General
Dynamics watching its $5 millon investment grow to more than
$40 rnillion by the time
Federal Express was first traded on the New york stock Exchange in December 197g.
The company continued to perform well since its public offering. combining technical

innovation and an obsession with customer orientation (Federal Express was the first
company to win the Malcolm Baldrige National Quality Award in the service category,
and in 1994 it became the first global express transportation company to receive simultaneous worldwide l5o 90ol certification) to ensure exceptional growth.
Since 2002,

with

of $20.6 billon and the company,s first-in-its-history

to grow. In the fiscal year ending in 200g, the combillion in revenues, offering just the right mix of transporta-

sales revenue

cash dividend, FedEx has continued

pany had grown

to

$38

tion, e-commerce, and business solutions. FedEx s composed of Federal Express, FedEx
Ground. FedEx Freight, FedEx Kinko's Office and Print Services, FedEx International pri-

ority, fedEx International priority Freight, FedEx smartpost. FedEx Home Delivery,
FedEx customer critical, FedEx Trade Networks, FedEx National LTL. FedEx supply
chain services, and FedEx servces. In 200g, FedEx averaged: (1) more than 7.5 million
shipments a day for express, ground, freight, and expedited delivery services; (2) more
than 290,000 employees and contractors woddwide; and (3) more than 220 countries
and territories, including every address in the Unted States.
The company has over 18 million Web site visitors monthly and processes more than
5 million tracking requests daily. There are more than 20 million packages shipped via
FedEx Ship Manager monthly and 670 aircrafts serving more than 375 airports
world-

wide. FedEx has more than 80,000 motorized vehicles for express. ground, freight, and
expedited delvery service; 725 FedEx world Service centers; 1,2g'l FedEx Kinko,s office
and Print centers; 6,505 FedEx Authorized shipcenters; and 44,00g FedEx Drop Boxes
(including 4,979 u.s. Postal service locations). The firm's stock price saw a high
of g109
in July 2007, up from 962 in July 2003 (though it saw a steep decline during the
2008/2009 recession, seeing a low of 934 in March 2009).
At the heart of Frederick Smith3 success story is the creativity and uniqueness of the ini-

tial business concept. This part of the new venture creation process is perhaps the most
difficult to actualize. What specific features does the new product or service need? A wide
variety of techniques can be used to obtain the new product idea. Smith expressed his
original idea in a paper he wrote to complete a college course. For others-+uch as Bob
Reis of Final Technology, Inc., and Frank perdue of perdue chickens-the idea came
from
work experience. No matter how it occurs, a sound. unique idea for a new product (or
service), properly evaluated, is essential to successfully launching a new venture. Throughout this evaluation, or opportunity analysis. the entrepreneur must remember that most
ideas do nof provide the basis for a new venture; rathel it is important to sift through and
identify those ideas that can provide such a basis so that they can be the entrepreneur's
focus. A

good method for doing this is to look at trends that will occur in the next decade.

PART

FROM IDEA TO THE OPPORruNI|Y

TRENDS
A

trend often provides one ofthe greatest opportunities for starting a new venture, particularly when the entrepreneur can be at the start of a trend that lasts for a considerable period

of time. Seven trends that will provide opportunities, indicated in Table 4.1, include: green
trend, clean-energy trend, organic-orientation trend, economic trend, social trend, health
trend, and Web trend.

Green Trend
The green sector is brimming with opportunities for entrepreneurs around the world. While
today's consumers are very conscious about spending, considering the economic conditions, many are still willing to pay more for green products. Water is one aspect of this
green trend that provides opportunities, particularly in the area of irrigation, such as reclamation programs for golf courses and parks, smart irrigation systems, and consulting firms
that increase water-use efhciency. Other business areas worth looking at include ecofriendly printing, recycling, and green janitorial services.

Clean-Energy Trend
One of the most pressing environmental concerns of consumers is global warming with the
resulting opportunities in clean energy. Many feel that the power of the 21st century will
come from solar, wind, and geothermal sources. A significant factor that will accelerate this
movement from coal being the power in the l9th century and oil in the 20th century is
when solar costs are equal to the costs ofelectricity either from cost reductions and efhciency in solar conversion capacity and/or tax breaks for solar production and use. Smaller
businesses and homeowners are a significant untapped market in this area.

0rganic-0 rientation Trend

The organic trend is increasing significantly, particularly in the food sector, which has been
accelerated by the shrinking price gap between organic and nonorganic foods. The sales
growth in all organic foods including meat, dairy, fruits, vegetables, breads, and snack
foods averages about 25 percent pr year. Total organic nonfood sales are also growing,
particularly in apparel. Oscar and Belle was started in 2007 by Anna Gustafson to provide
organic apparel for babies. The baby clothing, size newborn to 2T, is distributed through
retail outlets and online (oscarandbelle.com).

CHAPTER

CREATIVITYAND THE BUSINESS IDEA

97

Economic Trend

Social Trend

;ttt,'j,
nancial
ability to be frnancially solvent and
of seeing new places with their chilmple, is a one-stop advisory service
anning.

Health Trend

Web Trend
The Web trend is creating many new forms of communication and purchasing, which is
opening up massive opportunities for entrepreneurs. This has been driven by Web 2.0. The
opportunities, with low-cost barriers to entry, are in numerous areas such as web 2.0
consulting, blogging, online video, mobile applications (apps), and Wi_Fi apps.
An entrepreneur should carefully monitor these trends to see if any produce ideas and
opportunities that make sense. He or she should also look at the many sources of ideas
as

well.

SOURCES OF NEW IDEAS

Some of the more frequently used sources of ideas for entrepreneurs include consumers;
existing products and services, distribution channels, the federal government, and research
and development.

Consumers
Potential entrepreneurs should continually pay close attention to potential customers. This
attention can take the form of informa
needs or formally
arranging for consumers to have an op
. Care needs to be
taken to ensure that the idea or need
to suppon a new
venture.

PART

FROM IDEA TO THE OPPORTUNITY

Existing Products and Services

Potential entrepreneurs should also establish a formal method for monitoring and evaluating competitive products and services on the market. Frequentl this analysis uncovrs
ways to improve on these offerings that may result in a new producf or service that has
more market appeal and better sales and profit potential-

Distribution Channets
Members of the distribution channels are also excellent sources for new ideas because
of their familiarity with the needs of the market. Not only do channel members frequently have suggestions for completely new products, but they can also help in marketing the entrepreneur's newly developed products. One entrepreneur found out from a
salesclerk in a large department store that the reason his hosiery was not selling well
was its color. By heeding the suggestion and making the appropriate color changes, his
company became one ofthe leading suppliers ofnonbrand hosiery in that region of the
United States.

FederaI Government
The federal government can be a source ofnew product ideas in two ways. First, the files
of the Patent Office contain numerous new product possibilities. Although the patents
themselves may not be feasible, they can frequently suggest other more marketable product ideas. Several government agencies and publications are helpful in monitoring patent
applications. T\e Officinl Gazette, published weekly by the U.S. Patent Ofifice, summarizes
each patent granted and lists all patents available for license or sale. Also, the Government
Patents Board publishes lists of abstracts of thousands of government-owned patents; a
good resource for such information is the Government-Owned Inventories Available for
License. Other govemment agencies, such as the Offrce of Technical Services, assist entrepreneurs in obtaining specifrc product information.
Second, new product ideas can come in response to government regulations. For
example, the Occupational Safety and Health Act (OSHA) mandated that hrst-aid kits be
available in business establishments employing more than three people. The kits had to
contain specihc items that varied according to the company and the industry. For example, the weatherproofed frrst-aid kit needed for a construction company had to be different from the one needed by a company manufacturing facial cream or a company in
retail trade. In response to OSHA, both established and newly formed ventures marketed
a wide variety of first-aid kits. One new company, R&H Safety Sales Company, was successful in developing and selling firsraid kits that allowed companies to comply with the
standards ofthe act.

Research and Development

The largest source of new ideas is the entrepreneur's own "research and development"
efforts, which may be a formal endeavor connected with one's current employment or an
informal lab in a basement or garage. One research scientist in a Fortune 500 company developed a new plastic resin that became the basis of a new product, a plastic molded modular cup pallet, as well as a new venture-the Arnolite Pallet Company, lnc.-when the
Forlune 500 company was not interested in developing the idea.

., ;\S
"

.THE

Source: Reprinted from the September 23, 2006 issue of BusinessWeek by special permission, copyright @ 2006 by The McGaw-Hill
Companies, Inc., "The Myth of Creativity,' by Robin Hanson,
BusinessWeek, Issue 3991, p. 134.

METHODS OF GENERATING IDEAS

Even with such a wide variety of sources available, coming up with an idea to serve as the
basis for a new venture can still pose a problem. The entrepreneur can use several methods
to help generate and test new ideas, such as focus groups, brainstorming, brainwriting, and
problem inventory analysis.

Focus Groups

of
providing
information in a
structured format

focus gtoups Groups

individuals

Focus groups have been used for a variety ofpurposes since the 1950s. A moderator leads a
n rather than simply asking questions to
the moderator focuses the discussion of
ner. The group of g to 14 participants is
stimulated by comments from each other in creatively conceptualizing and developing a
new product idea to fill a market need. One company interested in the women's slipper
market received its new product concept for a "warm and comfortable slipper that hts like
an old shoe" from a focus group of 12 women from various socioeconomic backgrounds

ili?:i:::::J'l;Iif"llli,";':ilil:H:1,,r""[':#::"ffi T:TJfl il:l,lllri,:

group members.

99

1OO PART 2

FROM IDEA TO THE OPPORruNIY

In addition to generating new ideas, the focus group is an excellent method for initially
screening ideas and concepts. With the use of one of several procedures available, the results can be analyzed more quantitatively, making the focus group a useful method for generating new product ideas.r

Brainstorming
brainstorming A group
method for obtaining new
ideas and solutions

The brainstormizg method allows people to be stimulated to greaer creativity by meeting with
others and participating in organized group experiences- Although most of the ideas generated
by the group have no basis for further development, sometimes a good idea emerges. This has
a greater frequency of occurrence when the brainstorming effort focuses on a specific product or market area. When using brainstorming, these four rules should be followed:

l.

No criticism is allowed by anyone in the group-no negative comments.

2. Freewheeling

is encouraged-the wilder the idea, the better.

3- Quantity of ideas is desired-the greater the number of ideas, the greater the likelihood of the emergence of useful ideas.

4. Combinations

and improvements of ideas are encouraged; ideas of others can be used

to produce still another new idea.

The brainstorming session should be fun, with no one dominating or inhibiting the
discussion.
A large commercial bank successfully used brainstorming to develop a journal that
would provide quality information to its industrial clients. The brainstorming among nancial executives focused on the characteristics of the maket, the information content, the
frequency of issue, and the promotional value of the journal for the bank. Once a generl
format and issue frequency were determined, focus groups of vice presidents of finance of
Fortune 1000 companies were held in thee cities-Boston, Chicago, and Dallas-to discuss the new journal format and its relevancy and value to them. The results of these focus
groups served as the basis for a new hnancial journal that was well received by the market.

Brainwriting
Brainwriting is a form of written brainstorming. It was created by Bernd Rohrbach at the
end of the 1960s under the name Method 635 and differs from classical brainstorming by
giving participants more time to think than in brainstorming sessions, where the ideas are
expressed spontaneously. Brainwriting is a silent, written generation of ideas by a group of
people. The participants write their ideas on special forms or cards that circulate within the
group, which usually consists of six members. Each group member generates and writes
down three ideas during a hve-minute period. The form is passed on to the adjacent person,
who writes down three new ideas, and so on, until each form has passed all participants. A
leader monitors the time intervals and can reduce or lengthen the time given to participants
according to the needs of the group. In a variation of this idea-generation method, the participants are located at their own workplaces and the sheets are rotated by e-mail; in this
case, the time interval can be longer.2

Problem Inventory Anatysis

problem invenlnry

analysis A

method for

obtaining new ideas and

solutions by focusing on
problems

Problem inventory analysis uses individuals in a manner that is analogous to focus groups
to generate new product ideas. However, instead of generating new ideas themselves, consumers are provided with a list of problems in a general product category. They are then
asked to identify and discuss products in this category that have the particular problem.

CHAPTER

Soure: From '/rml oJMarketingby Edward M- Taube- Copyright @ 1975 by

of American Muketing Association via Copyright Cteaarce dntir.

Amricm Muketing

CREATIVITY ANO THE BUSINESS

IDEA

1O.I

Assmiation (AMA-Chicago). Reproduced with rcmission

This method is often effective since it is easier to relate known products to suggested problems and arrive at a new product idea than to generate an entirely new product idea by itself. Poblem inventory analysis can also be used to test a new product idea.
An example of this approach in the food industry is illustrated in Table 4.2. One of the
most diffrcult problems in this example was in developing an exhaustive list of problems,
such as weight, taste, appearance, and cost. once a complete list of problems is developed,
individuals can usually associate products with the problem.
Results from product inventory analysis must be carefully evaluated as they may nor actually reflect a new business opportunity. For example, General Foods's introduction of a
compact cereal box in response to the problem that the available boxes did not ht well on
the shelf was not successful, as the problem of package size had little effect on actual purchasing behavior. To ensure the best results, problem inventory analysis should be used primarily to identify product ideas for further evaluation.

CREATIVE PROBLEM SOLVING

Creativity is an important attribute of a successful entrepreneur. Unfortunately, creativity tends to decline with age, education, lack ofuse, and bureaucracy. creativity genrally declines in stages, beginning when a person stats school. It continues to deteriorate

102

PART

creatire p rob

FROM IDEATOTHEOPPORTUNIY

Le,11 s o

lv itxg

A method for obtaining

through the teens and continues to progressively lessen through ages 30, 40, and 50.
Also, the latent creative potential of an individual can be stifled by perceptual, cultural,
emotional, and organizational factors. Creativity can be unlocked and creative ideas and
innovations generated by using any ofthe creative problem-solving techniques indicated
in Table 4.3-3

new ideas focusing on the

parameters

Brainstorming
The hrst technique, brainstorming, is probably the most well known and widely used for
both creative problem solving and idea generation. In creative problem solving, brainstorming can generate ideas about a problem within a limited time frame through the spontaneous contributions of participants. A good brainstorming session starts with a problem
statement that is neither too broad (which would diversify ideas too geatly so that nothing
specific would emerge) nor too natrow (which would tend to confine responses).4 Once the
problem sr,atement is prepared, 6 to 12 individuals are selected to participate. To avoid inhibiting responses, no group member should be a recognized expert in the field ofthe problem. Atl ideas, no matter how illogical, must be recorded, with participants prohibited from

criticizing or evaluating during the brainstorming session.

Reverse Bnainstorming
reverse brninstorming

A group method for

obtining new ideas
focusing on the negative

brainstotming is simila to brainstorming, except that criticism is allowed. In fact,

the technique is based on finding fault by asking the question, "In how many ways can this
idea fail?" Since the focus is on the negative aspects of a product, service, or idea, care
must be taken to maintain the group's morale. Reverse brainstorming can be effectively
used before other creative techniques to stimulate innovative thinking.5 The process usually
involves the identihcation of everything wrong with an idea, followed by a discussion of
ways to overcome these problems. Reverse brainstorming almost always produces some
worthwhile results as it is easier for an individual to be critical about an idea than to come
Reverse

up with a new idea.

Gordsn Method
Gordon

melhod

Method.

for developing new ideas

when the individuals are
unaware of the problem

The Gordon method, unlike many other creative problem-solving techniques, begins with
group members not knowing the exact nature of the problem. This ensures that the solution is not clouded by preconceived ideas and behavioral patterns. The entrePreneur starts
by mentioning a general concept associated with the problem. The group responds by
expressing a number ofideas. Then a concept is developed, followed by related concepts,
through guidance by the entrepreneur. The actual problem is then revealed, enabling the
group to make suggestions for implementation or refinemont of the final solution.

CHAPTER

CREANVfiYANDTHE BUSINESS

IDEA

.IO3

Checktist Method
a new idea
can use the
ideas or co
any length.

checklist method
Developing a new idea
through a list of related
$sues

.
'
'
'
.
.
.
.
.

related issues or swgesto guide the direction of

areas. The checklist mav

llows:7

Put to other uses? New ways to use as-is? Other uses if modihed?
Adapt? what else is like this? what other ideas does this suggest? Does past offer

parallel? What could I copy? Whom could I emulate?

Modify? New twist? Change meaning, color, motion, odor, form, shape? other changes?
Magnify? what to add? More time? Greater frequency? Stronger? Larger'l rhicker?
Extra value? Plus ingredienr? Duplicare? Mutriply? Exaggerate?

Minify? what substitute? Smaller? condensed? Miniature? Lower? Shorter? Lieher?

Omit? Streamline? Split up? Undersrated?
Substitute? who else instead? what else instead? other ingredient? other material?
other process? other power? other place? other approach? other tone of voice?
Rearange? lnterchange components? other pattern? other layout? other sequence?
Transpose cause and effect? Change track? Change schedule?
Reverse? Transpose positive and negative? How about opposites? Tum it backward?
Turn it upside down? Reverse roles? Change shoes? Turn tables? Turn other cheek?
combine? How about a blend, an alloy, an assortment, an ensemble? combine units?
Combine purposes? Combine appeals? Combine ideas?

Free Association
free associaton
Developing a new idea
through a chain of word
assoc tatrons

t most effe
can use tO generate ney
z- This tec
n entirely new slant to a
or phrase
down, then another and
another, with each new word attempting to add something new to the ongoing thought
processes, thereby creating a chain ofideas ending with a new product idea emerging.

Forced Relationships
forced relatiottships
Developing a new idea by

looking ar product
combinations

Forced relationships, as the name implies, is the process of forcing relationships among
some product combinations. It is a technique that asks questions about objects or ideas in
an effort to develop a new idea. The new combination and eventual concept is developed
through a hve-step process:8
I . Isolate the elements of the problem.
2. Find tlre relationships between these elements.
3. Record the relationships in an orderly form.

1.
5.

Analyze the resulting relationships to find ideas or patterns.

Develop new ideas from these patterns.
TabIe 4.4 illustrates the use of this technique with paper and soap.

collctive notebook

melhod Developitg
a new idea by group

memben regularly
recording ideas

Collective Notebook Method

Inthe collective notebook method asmallnotebook that easily fits in a pocket----containing a
statement of the problem, blank pages, and any pertinent background data-is distributedParticipants consider the problem and its possible solutions, recording ideas at least once, but

:_

A5.S.E.EN

IN

BUSIA/ESSWEE K

What if we'told you that you could come up with

great idea an$ime you wanted?

We'll go further..We can show you how not only
to summon new and innovative concepts on command
but also to teach your people the same skill. This may
sound like an infomercial ("Order our revolutionary
system within the next 20 minutes, and we'll throw in
a set of steak knives absolutely free"), but it's true.
The five techniques outlined below have one
thing in common: They free your brain to let your
best ideas flow.
As it is, you undoubtedly have too much on your
mind. When you're driving durng rush hour, you are
too busy dealing with traffic to notice the scenery
and enjoy the ride. The following practices eliminate
mental traffic and help you liberate the great ideas
inside you that are desperately trying to get out.
1- Shower your way to creativity. Yep, it's absolutely
true. There is a scientific theory that water hitting
your head helps trigger the synapses and that's
why people get great ideas in the shower. But we
think it3 simpler than that: The ideas occur because
you are not making an effort to think. You aren't
worried about anything. You are not stressed.
Hence some of your best thinking occurs.

2. Sleep on it. Remember how your mom used to

say. "Why don't you sleep on it, honey?" when
you were wrestling with a big issue? Well, when

comes to big ideas and problem solving,

Mother really does know best. The next time you
want to solve a major chailenge or be unusually
brilliant, think about it in bed. Don't push yourself to figure out the answer before you fall
asleep. Instead, just go through the issues at hand
and tell yourself that you willhave the answer in
the morning. In our experience, thistechnique
amplifies the power of the shower, because there
are even fewer distractions to occupy your mind
when you are asleep.
You can employ an alternate version of tl"iis
while awake. The next time you can't think of
a name, date. or important fact, just tell yourself,
aloud, "l will not think about this for a whife,
and the answer will come to me." This technique
clears the traffic in your mind and lets your subconscious go to work. Your answer will often pop
into your head the moment you stop "thinking
about it."
3. Engage in mind-mapping. Purging is a great
way to make new connections and create bigger
ideas. Have a tough challenge to solve? Get a
giant piece of paper (write small if you can't find
one). In each quarter of the paper, write a
keyword related to the challenge. For example,
if you want to plan a cool family vacation, you
might write the words "destinations," "transportation," "memories," and "kids." Then, in no

it

Elements: Paper and Soap

ldea/Pattern
Flakes

Wash and dry travel aid

Tough paper impregnated

with'soap and usable for
washing surfaces
Booklets of soap leaves
ln coatng and impregnation processes
5u g

gests wa ll paper leaner

Source: Willim E. Souder and Robert W. Ziegler, "A Review of Creativity and Problem Solving Techniques
agement (Iuly 1975). p 37.

l'

Research Mon

j__:

your daydreamig. We all have a time

of day when our brairis work the best. For many,
it is first thing in the morning, before rush hour.
Unfortunately, the CrackBerry addiction has many
of us checking our e-mail just when our brains are
the most capable of creating. The moment you
check your e-mail, voice mail, or to-do list, you
have hijacked your imagination. you have
created a mental traffic jam. Do yourself a favor
and schedule daydreaming. Unplug during the
time that you know you do your best thinking
and find a place that makes you feel energized. A
lot of people love the local coffee shop. The buzz
of conversation, the smells, colors, and energy
create a safe haven for the mind to wander. Some
prefer the library or the park. Whichever it is, go
there. Let your mind wander.

4 Schedule

TRY THIS!
In the next week. try each of these techniques, one
each day. Come up with at least one idea from each
method.
16, 2008 issue of BusinessWeek by
8 by The Mccraw-Hill Companies.

Demand," by G. Michael Maddock

and Raphael Louis Vitn, www.businessweek.com,/managing/
contenc/dec2008 / ca20D8l216 497 3 l2.htm.

At the end of a week, a

technique can also be
rnotebooks toacentral
terial and lists the ideas in order of frequency of mention. The summary becomes the
topic of
a final creative focus group discussion by the group participants.

Attribute Listing
atlribute listing
Developing a new idea by
looking at the positives
and negatives

that requires the entrepreneur to list the attribach from a variety of viewpoints. Through this

brought together to form a new combination

and possible new uses that better satisfy a need.ro

106

PART

FROM IDEATOIHEOPPORruNITY

Big-Dream Approach
big-tlream approach
Developing a new idea by

thinking without
consral ns

The big-dream approach to coming up with a new idea requires that the entrepreneur
dream about the problem and its solution-in other words, think big. Every possibility
should be recorded and investigated without regard to all the negatives involved or the resources required. Ideas should be conceptualized without any constraints until an idea is
developed into a workable form. 1l

Parameter Anatysis
paranteter analysis
Developing a new idea by
focusing on parameter
idenfrcation and creative
synthesis

A f,rnal method for developing a new idea-parameter analysis-involves two aspects: parameter identification and creative synthesis.12 As indicated in Figure 4.1, step one (parameter identihcation) involves analyzing variables in the situation to determine their relative
importance. These variables become the focus of the investigation, with other variables
being set aside. After the primary issues have been identif,red, the relationships between
parameters that describe the underlying issues are examined. Through an evaluation of the
parameters and relationships, one or more solutions are developed; this solution development is called creative synthesis.

INNOVATION
Innovation is the key to the economic development of any company, region of a country, or
country itself. As technologies change, old products decrease in sales and old industries
dwindle. Inventions and innovations are the building blocks of the future of any economic
unit. Thomas Edison reportedly said that innovative genius is 1 percent inspiration and
99 percent perspiration.

Types of Innovation
There ae vaious levels of innovation based on the uniqueness of the idea. As indicated in
Figwe 4.2,there ae thee major types of innovation, in decreasing order of uniqueness: breakthrough innovation, technological innovation, and ordinary innovation. As you would expect,
the fewest innovations ae ofthe breakthrough type. These extremely unique innovations often
establish the platform on wbich future innovations in an area aredeveloped. Given that they are
often the basis for further innovaon in an area, these innovations should be protected as much

CHAPTER

CREATIVIWAND THE BUSINESS

IDEA

1O7

or copyrights (see Chapter 6). Breakthrough

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tor orrhe cenrer ror Micro and Nano p,*..,i'"1'cc#ii;:*h:::i"tffiT[,T;;i."tr;

is a world expert on sensor technology and invenis and

builds nano sensor systems for autome
tive, biomedical, commercial, and industrial applications.
Despite pubshing a malority of his
inventions, Dr. Liu stilr holds 12 patents in eiectrochemical
and sensor teclnology, many of
which have been licensed. one of his inventions is the technology
for an electrochemical sensor system that can transmit findings to a nearby receiver.
one of these nano devices can analyze the condition of motor oil from inside an engine. Another
nano device can measure blood
glucose levels. One of his latest nano inventions can
detect black mold in homes, hidden
bombs, illegal drugs, and termites; this technology is presently
being commercialized throush

ab

n_occurs more frequently than

level of scientifrc discovery and

advancement. Nonetheless, these are very meaningful
innovations, as they do offer ad_
vancements in the produclmarket area. As such, they usually
need to be protected. Such innovations as the personal compute the flip watch for .oniuining
pictures, voice and text
messaging, and the jet airplane are examples of technological
innovations.
Analiza, Inc-, a twelve-year-old bioscience company, invented,
developed, and sells a
system that allows drug manufacturers to quickly screen
chemical compounds for the ones
mo^st suitable for new drugs. This automated discovery
workstation simultaneously tests many
different drug compounds, identifying the compounds most
suitable for a new drug based on
how the human body is likely to react to the compound. The
company is further exploring
other technological innovations such as an advanced blood
test product ior diagnosing cancer,
a product for extending the shelf life of blood platelets,
and a pregnancy test for cows.
The final type of innovation---ordinary innovation-is the
one that occurs most fiequently.
These more numerous innovations usually extend a technological
innovation into a better

108

PART

FROM IOEATO THE

OPPORruNIY

product or srvice or one that has a different----sually better-market appeal. These innova-

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push). One ordinary innovation was developed by Sara Blakely, who wanted to get rid of unsightly panty lines. To do this, she cut off the feet ofher control-top panty hose to produce
footless panty hose. Investinghertotal money available ($5,000), Sara Blakely started Spanx,
an Atlanta-based company, which in hve years had annual earnings of $20 million.
Similarly, Martha Aalons, the second flutist of the Cleveland Symphony, practices a
5,000-year-old Hindu system of physical and spiritual exercise. One of the exercises--the
Downward Facing Dog----requires a "sticky mat" in order to prevent the gloves and slippers

from sliding. Not wanting to carry the mat along with her instrument on trips, Martha
Aaons invented gloves and slippers with a gripping substance. She is now in the process
of commercializing her skid-free slippers and gloves.

Defining a New Innovation (Product or Service)

One of the dilemmas faced by entrepreneurs is dehning a "new" product or identifying
what is actually new or unique in an idea. Fashion jeans became very popular even though
the concept of blue jeans was not new. What was new was the use of names such as
Sassoon, Vanderbilt, and Chic on the jeans. Similarly, Sony made the Walkman one of the
most popular new products of the 1980s, although the concept of cassette players had been
in existence for many years.
In these examples, the newness was in the consumer concept. Other types of products,
not necessarily new in concept, have also been dehned as new. When coffee companies introduced naturally decaffeinated coffee, which was the only change in the producl the initial promotional campaigns made definite use of the word new in the copy.
Other old products have simply been marketed in new packages or containers but have
been identified as new products by the manufacturer. When soft drink manufacturers inffoduced the can, some consumers viewed the product as new, even though the only difference
from past products was the container. The invention of the aerosol can is another example of
a change in the package or container that added an element of newness to old, established
products, such as whipped cream, deodorant, and hair spray. Flip-top cans, plastic bottles,
aseptic packaging, and the pump have also contributed to a perceived image of newness in
old products. Some firms, such as detergent manufacturers, have merely changed the colors
of their packages ard then added the word new 0o the package and their promotional copy.
Panty hose are another product that has undergone significant marketing strategy
changes. L eggs (a divisionofHanes Corporation) was the first to take advantage ofsupermarket merchandising, packaging, lower prices, and a new display.
In the industrial maket, firms may call their products "new" when only slight changes or
modihcations have been made in the appearance of the product. For example, improvements
in metallurgical techniques have modified the precision and strength of many raw materials
that are used in industrial products, such as machinery. These improved characteristics have
led firms to market products containing the new and improved metals as "new." Similarly,
each new version of Microsoft Word usually includes only minor improvements.
In the process of expanding their sales volume, many companies add products to their
product line that are already marketed by other companies. For example, a drug company
that added a cold tablet to its product line and a long{ime manufacturer of soap pads that
entered the dishwasher detergent market both advertised their products as new. In both
cases the product was new to the manufacturer but not new to the consumer. With the increased emphasis on diversification in the world economy, this type of situation is quite

CHAPTER

CREATIVITYANDTHE BUSINESS

IDEA

109

common today' Firms are constantly looking for new

markets to exploit to increase profits
and make more effective use of their resouices. Other firms
ae simpty changing one or
'
more of the marketing mix elements to give old products
a new image.

Ctassification of

llew products

New products may be classihed from the viewpoint of either

the consumer or the firm.
Both points of view should be analyzed,by the entrepreneur
since both the ability to establish and attain product objectives and consumer perception
of these objectives can determine the success or failure of any new product.

From a eonsumen s Viewpoint There is a broad interpretation

of what may be labele.d a
new product from the consumer's
cbssifies
tbe degree ofnewness according to how
required
by the consumer to use the product. This
effect on
the consumer rather than whether the product is new to a
company, is packaged differently, has
changed physical form, or is an improved version of an ord
o, irting p.oa"u"t.
The continuum proposed by Thomas Robertson and shown in
Figure 4.3 contains thee
cat'egories based on the disrupting influence that use of the product
as on established consumption patterns. Most new products tnd to fall at the "continuous
innovations" end of the
continuum. Examples ae annual automobile style changes,
fashion style changes, package
changes, or product size or color changes. products such
as compact discs, the Sony walkman,
and the iPod tend towad the "dynamically continuous" portion
of

viewpoint.
muc
tech

"

the continuum. The truly

new products' called "discontinuous innovations," are rare and
require a great deal of new
learning by the consumer because these products perform
either a previousli unfulfilled function or an existing function in a new way. The Internet is one exumile
of a discontinuous innovation that has radically altered our society's lifestyle. The basis
for identifying new products
according to their effect on consumer consumption patterns is
consistent with the marketing
philosophy that "satisfaction of consumer needs" is fundamental
to a venture,s existence.

From a Firm's Viewpeini The innovative entrepreneurial hrm, in

addition to recognizing
the consumer's perception of- newness, may also find it necessary
to classify its new products
on some simila dimensions. One way of classifying the objectives
of new products is shown

continuous
Innovations
(Least disrupting
influence on
established
consumption
patterns)

Bn".TJ""ly
Innovations

disruplinS
on
establshed
consumpton
patterns)

(Some
influence

Discontinuous
Innovaons

(lnvolves the
establishment
of new consumption
pafterns and the
creation of previously
unknown products)

Source: Adapted from Thoms Robertson, "The Process of

Innovation and e Diffusion of lnnovattod,
(January 1967), pp. t4-19.

Jouml

of Marketing

110

PART

FROM IDEA TO THE OPPORTUNITY

in Figure 4.4. In this hgure, an important distinction is made between new products and new
makets (i.e., market development). New products are defined in terms of the amount of improved technology, whereas maket development is based on the degree ofnew segmentation.
The situation in which there is new technology and a new market is the most complicated and difhcult-and it has the highest degree of risk. Since the new product involves
new technology and customers that are not now being served, the firm will need a new and
carefully planned marketing strategy. Replacements, extensions' product improvements,
reformulations, and remerchandising involve product and market development strategies
that range in difhculty depending on whether the firm has had prior experience with a similar product or with the same target market.

OPPORTUN ITY RECOGN ITION

Some entrepreneurs have the ability to recognize a business opportunity, which is fundamental to the entrepreneurial process as well as growing a business. A business opportunity represents a possibility for the entrepreneur to successfully hll a large enough unsatisfred need
that enough sales and profits result. There has been signihcant research done on the opport3
tunity recognition process and several models developed. One model that clearly identifres
the aspects of this opportunity recognition process is indicated in Figure 4.5.
As is indicated, recognizing an opportunity often results from the knowledge and experience of the individual entrepreneur and, where appropriate, the entrepreneurial businessThis prior knowledge is a result of a combination of education and experience, and the relevaniexperience could be work related or could result from a variety ofpersonal experiences or events. The entrepreneur needs to be aware of this knowledge and experience and
have the desire to understand and make use of it. The other important factors in this process
are entrepreneurial alertness and entrepreneurial networks. There is an interaction effect
between entrepreneurial alertness and the entrepreneur's prior knowledge of markets and
customer problems. Those entrepreneurs who have the ability to recognize meaningful
business opportunities are in a strategic position to successfully complete the product planning and development process and successfully launch new ventures.

CHAPTER 4

CREATIVITY ANO THE BUSINESS IDEA

111

Personal
expel'lences

Souree: From Alexander Ardiehvili and Richard N. Cardozo, "A Model of Ibe EnlrepreneuriaJ Opponunily Recognilion Process,"
Journal 01 Enterprising Culture 8. no. 2 (June 2(00). Reprinted wlh permission ofWorld Seienlifie Publishing Co, Ine.

Each and every innovative idea and opportunity should be carefully assessed by the
global entrepreneur. One good way to do this is to develop an opportunity analysis plan,
which is discussed in Chapter 5.

PROOUCT PLANNING ANO DEVELOPMENT PROCESS

product lije cycle

The

stages each product goes

Once ideas emerge from idea sources or creative problem solving, they need further development and refinement This refining proce --the product pianning and development
proccss-is divided into five major lages: idea stage, concepl stage, product development
stage, test marketing stage, and commercialization' il resuils in the start of me product life
cycle (see Figure 4.6).1~

through from introduction

10 decline

product pla/ln ing alld

devetopmellt process
The stages in developing
a new product

Establishing Evaluation Criteria

At each stage of the product plannng [IJ1d development process, criteria for evalualion need
to be established. These criteria should be all-incJusive and quantitative enough lo screen
the product carefully in the particular slage of development. Crireria should be established

Product
Test
development marketing
stage
stage

Qj

.C;

1
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Qj

aI

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CI.
~ o

il]!
' "' 'C
<D
-

.~

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c::J
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Q) as

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(/)0.. w

Introductlon . Grdwth

Maturity

Somee: From Marketin g Decisionslor New ami Mature Products, 2nd edition, by Roben D. Hisrieh and Miehael P. Petees,
1991. Reprinled by permisson of Pearson Eduealon, Ine.. Upper Sadd1e River, NJ.

ETHICS
LEADERSHIP I5 ABOUT DOING, NOT SAYING
Those plaques on the walls! Those inspiring mottos!
Companies have wasted millions of dollars and count-

les hours agonizing oer buzzwords and slogans that

arg.hung on walls- There is a clear assumption that
ieople's behavior will change because the pronounceinents on plaques are "inspirational" or certain words
"integrate our strategy and values." There is an implicit

hope that when people--especially managers-hear

great words, they will start to exhibit great behavior.
Sometimes these words or phrases morph as people

try to keep up with the latest trends in corporatespeak. A company maybegin by striving for "customer

-satisfaction,"

then advance to "total customer satisfaction," and then finally reach the pinnacle of "cufomer
delight."

ENRON TALKED A GOOD GAME

But this obsession with words belies one very large
problem: There is almost no correlation between the
words on the wall and the behavior of leaders. Every
company says it wants "integrity," "respect for people." "quaIity," "customer satisfaction," "innovation,"
and "return for shareholders." Sometimes companies

get creative and toss in something about "community" or "suppliers." But snce the big messages are all
basically the same. the words quickly lose meaning for
employees.

Enron is a great example. Before the energy conglomerate's collapse in 2001, lhad the opprtunityto
review Enron's values during a meeting with its senior management team. I was shown a wonderful
video on Enron's ethics and integrity. I was greatly
impressed by the high-minded beliefs the compay
espoused and the care that was put into the video.
Examples of Enron's good deeds in the community
and the professed character of Enron's executives
were particularly noteworthY.
It was one of the most smoothly professiohal presentations on ethics and values that I have ever seen.
Clearly, Enron spent a fortune "packaging" these

wonderful messages. lt didn't really matter..Despite

the lofty words. a number of Enron's top executives
either have been indicted or are in jail.

J&J ADHERES TO ITS CREDO

The situation couldn't be more different at

Johnson

where I had the opportunity to work

with that company's top 2,000 leaders. The pharmaceutical company is famous for its "Credo," which
was wrtten many years ago and reflects the sincere
values of the leaders of the company at that time.
The J&J Credo could be considered rather quant by
today's standards. lt contains several old-fashioned
phrases, such as "must be good citizens-support
& Johnson (JNJ),

in terms of market opportunity, competition, the marketing system,

production
factors.
financial factors, and
form
of a new or current need for the product idea must exin
the
opportunity
A market
ist. The determination of market demand is by far the most important criterion of a proposed new product idea. Assessment of the market opportunity and size needs to consider
the following: the chaacteristics and attitudes of consumers or industries that may buy the
product, the size of this potential market in dollars and units, the nature of the market with
respect to its stage in the life cycle (growing or declining), and the share of the market the
to evaluabe the new idea

product could reasonably capture.

Current competing producers, prices, and marketing efforts should also be evaluated,
particularly in terms of their impact on the market share of the proposed idea. The new idea
should be able to compete successfully with products/services already on the market by
having features that witl meet or overcome current and anticipated competition- The new
idea should have some unique differential advantage based on an evaluation of all competitive products/services filling the same consumer needs.
The new idea should have synergy with existing management capabilities and marketing strategies. The firm should be able to use its marketing experience and other expertise
in this new product effort. For example, General Electric would have a far less diffrcult time

Source: Reprinted from the December 2007 issue of BusinessWeek

by special permission, copyrigbt O 2007 by The McGraw-Hill Companies, Inc., "Leadership Is About Doing, Not Saying," by Marshall
Goldsmith, www.bus inessweek.com/managing / connJ dec2OOT I
ca2o07 124 _97 l542.htm?chan=careers_managing
page_leadership * development.

adding a new lighting device to its line than Procter

& Gamble.

*your+ team+

Several factors should be

Entrepreneurs need to be concerned with formally evaluating an idea throughout its evolution- Care must be taken to be sure the product can be the basis for a new venture. This
113

114

PART

FROM IDEA TO THE OPPORruNIY

can be done through careful evaluation that results in a go or no-go decision at each ofthe
stages of the product planning and development process: the idea stage, the concept stage,
the product development stage, and the test marketing stage.

ldea Stage
dea

stage First stage in

product development
process

Promising new product/service ideas should be identified and impractical ones eliminated in
fhe idea stage, allowirrg maximum use of the compmy's resources. One evaluation method
successfully used in this stage is the systematic market evaluation checklist, where each new
idea is expressed in terms of its chief values, merits, and benefits. Consumers are presented
with clusters of new producUservice values to determine which, if any, new producUservice
altematives should be pursued and which should be discaded. A company can test riurny new
idea altematives with this evaluation method; promising ideas can be fuither developed and
resources not wasted on ideas that are incompatible with the market's valuesIt is also important to determine the need for the new idea as well as its value to the
company. If there is no need for the suggested product, its development should not be
continued. Similarly, the new product/service idea should not be developed if it does not
have any benefit or value to the frrm. To accurately determine the need for a new idea, it
is helpful to defrne the potential needs of the market in erms of timing, satisfacfion,
alternatives, benefits and risks, future expectations, price-versus-product performance
features, market structure and size, and economic conditions. A form for helping in this
need determination process is indicated in Table 4.5.The factors in this table should be
evaluated not only in terms of the characteristics of the potential new produclservice but
also in terms of the new produclservice's competitive strength relative to each factor.
This comparison with competitive products/services will indicate the proposed idea's
strengths and weaknesses.
The need determination should focus on the fype of need, its timing, the users involved
with trying the produclservice, the importance of controllable marketing variables, the
overall market structure, and the characteristics of the market. Each of these factors should
be evaluated in terms of the chaacteristics of the new idea being considered and the aspects
and capabilities of present methods for satisfying the particular need. This analysis will indicate the extent of the opportuniry available.
In the determination of the value of the new produclservice to the firm, frnancial
scheduling-such as cash outflow, cash inflow, contribution to proht, and return on
investment-needs to be evaluated in terms of other produclservice ideas as well as investment alternatives. With tlre use of the form indicated in Table 4.6, the dolla amount of each
of the considerations important to the new idea should be determined as accurately as
possible so that a quantitative evaluation can be made. These figures can then be revised as
better information becomes available and the produclservice continues to be developed.

Concept Stage
a new producUservice idea has passed evaluation in the idea stage, it should be further
developed and refined through interaction with consumers. In the concept stage, the refined
idea is tested to determine consumer acceptance. Initial reactions to the concept ae obtained
from potential customers or members of the distribution channel when appropriate. One
method of measuring consumer acceptance is the conversational interview in which selected
respondents are exposed to statements that reflect the physical chaacteristics and attributes
of the product/service idea. Where competing products (or services) exist, these statements
can also compare their primary features. Favorable as well as unfavorable product features

After
concept

stage

Second

stage in product

development process

CHAPTER 4 CREATIVITYANOTHEBUSINESSIDEA

Frequhcy 01 need
o.ernand cyele
Position in life C}'cI~

Doing without
Uslng present wiy
Modfyi~g pr~sent'way

ferceived 8en'lfitsfRisks
Utlit}" to custqmer. .
Appeal chanid:eristics
8uying motives
Consumption habts
Price versus Performance features
Price-quantity relationship
Demand efasticiiy
.5tabifity of price
Stability of market
Market. Size and Potential
Market growth
Market trends .
Market dev~lo.pment r.equirem.eots
Threats to market
Aval.ability of Cu~omer Fun"ds
General economic cor'lditions
Economic trends
Customer ncome
finaning opprtunities
Source: From Markeling Decisions for NeIV mili Mature Products. 2nd edition, by Robert D. Hisrieh and Miehael P. Peters,
1991. Reprinted by permission of Pearson Education, Ine., Upper Saddle River, NI.

115

.I16

PART

FROM IDEATO THE OPPORTUNITY

S@rce: From M@it ting Decisiorc for NN And Mature Products, 2nd edition, by Robert D. Hisrich md Michel
t99l Reprinted by pemission ofPurson Educaon, Inc., Upper Saddle River, NJ.

can be discovered by analyzing consumers'responses,

P-

Pete6'

with the favorable features then be-

ing incorporated into the new product/servic

Features, price, and promotion should be evaluated for both the concept being studied
and any major competing products by asking the following questions:
How does the new concept compare with competitive products/services in terms of
quality and reliability?

CHAPTER

CREATIVITY AND THE BUSINESS

IDEA

117

Is the concept superior or deficient compared with products/services

curently

available in the market?

Is this a good market opportunity for the firm?

Similar evaluations should be done for all the aspects of the marketing
strategy.

Product Development

Sta ge

product develnpment

sfg Thid stage in

product development
process

and one or
as

multiple

preference

Test Marketing Stage

test

mtrketing stage

Final stage before

commercialization in
product development
process

E-COMMERCE AND BUSINESS START-UP

included sport a
event tickets (13 percent); consumer electronics
(9 percent); and
(4 percent). Travel,s increase to $g4.3 billion in
2008 hadrisen 9
llion in 2007.
Factors that facilitated the high growth of electronic commerce on a business-to-

still in existence today: widespread use of

in companies, the acceptance ofthe Internet
faster and more secure systems. Numerous
costs, lower transaction cosrs, and tte
expand the volume of e-commerce.

inte.a#ii

f;?t:ffi:TflT:i:li'jiil1ffi:::

118

PART

FROM IDEA TO THE OPPORTUNfTY

Using E-Commerce Creativety

Electronic commerce is increasingly used by existing corporations to extend their marketing
and sales channels, as well as being the basis for some new ventures. The Internet is especially important for small and medium-sized companies, as it enables them to minimize
marketing costs while reaching broader markets- An entrepreneur starting an lnternet commerce venture needs to address the same strategic and tactical questions as any other entrepreneur. Additionally, some specific issues of doing business online need to be addressed
due to the new and perpetually evolving technology used in lnternet commerce- An entrepreneur has to decide whether he or she will run the Intemet operations within the company
or outsource these operations to Intemet specialiss. In the case of in-house operations, computer servers, routers, and other hardware and software as well as support services suchs
Web site information have to be maintained. Altematively, there are numerous possibilities
for outsourcing the Intemet business. The entrepreneur can hire Web developers to design
the company's Web pages and then upload them on the server maintained by the Internet
service provider. In this case, the entrepreneur's main task is to regularly update the information on the Web pages. Another option is to use the packages for e-commerce available
from different softwae companies. The correct decision between in-house operations or outsourcing depends on the size of the Internet-related business, particularly where Internet
operations are the company's primary business, and the relative costs of each alternative.
The two major components of Internet commerce are front-end and back-end operations. Front-end operations are encompassed in the Web site's functionality. Search capabilities, shopping cart, and secure payment are only a few examples. The biggest mistake
made by firiy companies on the Internet is believing that an athactive, interactive Web site
will secure su@ess; this leads to underestimating the importance of back-end operations.
Seamless integration of customer orders should be developed, with distribution channels
and manufacturing capabilities that are flexible enough to handle any specific customer's
desire. The integration of front-end and back-end operations represents the greatest challenge fordoing Intemet business and at the same time provides the opportunity for developing
a sustained competitive advantage.

Web Sites
The use of Web sites by entrepreneurial hrms has been increasing at a significant rate.
About 90 percent of small businesses today have operating Web sites. Howeve the majority of small businesses and entrepreneurs feel that they do not have the technical capability
to build and operate quality Web sites.
Oneof the keys to agoodWeb site is ease of use. In a 2008 ranking by Forester of 114Web
sites according to usefulness, ease of use, and enjoyability, Barnes & Noble was ranked number one, followed by USAA, Borders, Amazon, Costco, and Hampton lnr/SuitesIn developing a Web site' an entrepreneur needs to remember that a Web site is a communication vehicle and should address the following questions: Who is the audience? What
are the objectives for the site? What do you want the consumers to do upon visiting the
site? Is the Web site an integral part of the venture's total communications program? In addressing these questions, the entrepreneur needs to structure the Web site and organize the
information to effectively engage the target market. This requires that the material be fresh,
with new material added on a regular basis. The material should be interactive to engage
the individual. And. of course the Web site needs to be known and as visible as possibleOne of the most important features of every Web site is seach capability. It should be
easy to hnd information about the products and services that a company offers over the

CHAPTER

pages easy to navigate, then they will be able to qui

CREATIVITYANDTHEBUSINESS

IDEA

.I19

ites: speed, speed and speed. Additionspecifrc market target groups, and comin hand with speed; if visitors findWeb

tion. One of the greatest advanlages of the Internet

Web site content for different market sesments. It

procedure with the participant getting immediate feedback concerning responses given.
The
site is coordinated in both content and graphics with other marketing communications
of the
companf with the front page of the site updated weekly to draw people and give them a reason to revisit. The content of the site is updated every two weeks with at least one
new item.

Tracking Customer Information

Doing E-Commerce as an Entrepreneural Company

pany must be ready to ship the product outside its own geographical location. Third, online

12O

PART

FROM IDEA TO THE OPPORTUNITY

operations have to bring significant cost reductions compared with the prsent brick-andmortar operations. The fourth factor reflects the company's ability to economically draw
customers to its web site.

Conflict between traditional and online marketing channels (channel conflict) arises because of disagreements between manufacturers and retailers, which eventually lead into a
hostile, competing position ofonce-partnering companies. Partners in supply chains have
to focus on their core competencies and outsource the noncore activities. When introducing the competing distribution channels, companies have to weigh the costs and benehts of
that decision while taking into account the loss of existing business.

IN REVIEW

SUMMARY
The starting point for any successful new venture isthe basic product or service to be offered. This idea can be generated internally or externally through various techniques.

The possible sources of new ideas range from the comments of consumers to
changes in government regulations. Monitoring the comments of acquaintances, evaluating the new products offered by competitors, becoming farniliar with the ideas
contained in previously granted patents, and becoming actively involved in research
and development are techniques for coming up with a good product idea. In addition,
there are specific techniques entrepreneurs can use to generate ideas. For example, a

better understanding of the consumer's true opinions can be gained from using a
focus group. Another consumer-oriented approach is problem inventory analysis,
through which consumers associate particular problems with specific products and
then develop a new productthat does not contain the identified faults.
Brainstorming, a technique useful in both idea generation and problem solving'
stimulates creatvity by allowing a small group of people to work together in an open,

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dream" approach. Some techniques are very structured. while others are designed
be more free form. Each entrepreneur should know the techniques available.
Once

to

the idea or group of ideas is generated, the planning and development

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rffi 5:;i:;-n::#::?::l:Hl:J:tr':

opment. ldeas showing the most potential are then moved through the concept stage,
the product development stage, the test marketing stage, and finally into commercialization. The entrepreneur should constantly evaluate the idea throughout this process
to be able to successfully launch the venture.

RESEARCH TA5K5
1- Choose a product or technology. lnterview five consumers who buy that product
and ask them what major problerns they have with the product (or what major
things they dislike about it). Then ask them to describe the attributes of the
"perfect product" that would satisfy all their needs and replace the existing
product. Next. interview the representatives of five companies that offer the
product and ask them what they believe are the major problems customers
experience with their product. Come up with some futuristic solutions.

CHAPTER

CREATIVITYANDTHEEUSINESS

IDEA

12,1

2' obtain

3.

a patent of a technorogy (e.g., go to the patent

office web site) and come
up with 10 creative uses of the technology.

productsthat you might be interested in purchasing

and
ernet. For each product, visit three Web sites and g
if you were qoing to actually purchase the produJ. Which
web site was the best? why? which was the worst? why? you
rf
courd create the
perfect Web site. what features would it have?

DISCUSSION
1. Take the following probrem statement and brainstorm
sorutions. Be prepared to
present your three most "creative" solutions. problem
statement: ,,clstomers too
frequently use an airline and fly to a destination only
to find out that their
luggage has not arrived-',

2. choose a product and use the checklist method to deverop

new ideas. Be prepared
to discuss your product and the three most creative ideas generated.
3. Do you think that the Internet can be a source of advantage
for one firm over
other firms or do you think that it is a necessity just to oe
te to compete? Be
prepared to justify your answer.

SELECTED READINGS
Anonymous. (june 2008)- can America Keep lts competitive
Edge? rhe Economist.com.
Business View. London: ThJEconomif Newspaper
Limited, 3. www.economist.com/businesldisplaystory.cfm?story_id=1
14g26rr.

Avaihble from: Global Agenda.

protecting intellectua I prop

without increased federal fu
cast. The author disagrees wi
technology firm that displace
Barrett, Mike; and Mark simmonds. (January 1, 2o0g).
creativity on Tap. Training Journal, pp.34_38.
Two British

marketing coaches authored a four-part series about coupling

business
processes with personal deveropment. The
articre is packed with ittusttions, graphs,
and tables demonstrating the inextricable link between person,s
a
social nteractions and his or her creativitt Cooperative teams have
the ptentiat to
m.ost

incubate the

.revolutionary innovations; poweu! is the team whose members are commu_

nicative,

receptive,

the ephemeral

tu pin down
ProductivitY'
redients nec-

sub

Through several an
essary for a fruitfut
Baucus, Melissa s.; william

l. Norton, Jr.; David A. Baucus; and sherrie E. Human.

(2008)',Fosterin.g creativity and Innovation
without Encouraging unethical Behavior.
Journal of Business Ethics, vol.81, no. 1, pp.97-11 5Available frorn: ABt/lNFoRM
Gf obal. Accessed March 1 1, 2OOg, Document'lb:
1502952361.
The principal author of this article is an entrepreneurship professor

of

Louisville. lnterested

in

scandals

at

the IJniversity

in th business secto, the author-in

this

122

PART

FROMIDEATOTHEOPPORTUNITY

artcle-illustrates the ethical dilemma inherent in contemporary innovaton and

creativity models. Every MBA go-getter and corporate pedant knows the clich
recipe for success.' buck the system, rock the boat, think outside the box, throw
caution to the wind, defy the odds, eliminate "can't" from the vocabula4 take no
prsoners, etc. The article includes empirical research data suggesting this puffy
rhetoric is ineffective and outdated; usinesses want employees to foe the line. ..
Hamel, Gary. (Februa ry 2OO9). Moon Shots for Management. Harvard Business Revievv'
vol. 87, no. 2, pp. 91-98.
This article detals the results of a study conducted by the Silicon Valley's Management Lab. Founded by professors from the London.Business Schoo/ and funded in
part by UBS, the Management Lab collaborates with corporations to design original
management strategies. ln May 2008, the Lab organized an effort to describe a plan
for managers in the next century. The "moon shots" to which the author refers are
objectives for tomorrow3 business managers. Among these aspirations are imperatives to better maximize employees' talents and resourcefulness.
Harrison, Sam. (January 1,2009).8e Inspired to Innovate. Communication World,
pp."t7-20.
The author of this article compares entrepreneurial innovators to gamblers at a Las
Vegas casino. Just as intelligent blackjack or baccarat players devise strategies to
improve their chances of a winning hand, so can entrepreneurs train fheir brainstorming process for optimal success. The author purports, human creativty is not
haphazard; entrepreneurs can develop a mechansm to effectively nurture and
channe! their bright ideas in order to beat bankruptcy and stave off insolvency, for
example. Mr. Harrison, in his article, provides a five-step guide to sharpening the
focus of the mind's eye to achieve practical results.
Newman, Rick. (September 25, 2006). Lessons from the Rule Breakers: These "Mavericks" at Work Use Fresh Thinking to Win at Business. U.5. News & World Report.
Rick Newman, journalist for U.S. News & World Report, in this article reviews yet another addition to the how-to-succeed-in-business literature: Mavericks at Work:
Why the Most Original Minds in Business Win by William Taylor and Potly LaBarre.
Published in 2006, the book includes profiles of 32 entrepreneurs of note; these
"mavericks," as the title suggests, have gone against the grain of traditional business norms and been rewarded with success. Rick Newman condenses the book into
five key tips for would-be innovators stuck in the 9-to-5 grind.
Petersen, Chris. (October 22,2008).Inspiring Creativity: The Big ldeas. U.5. Business
Review, pp.8-9.Available from: Schofield Media Ltd. Accessed March 11,2009.
www.usbusi ness-review.com/contenVview | 1 07 4131 /.
This article is a brief exploration into the whys and wherefores of business productivity, which, opines the autho is closely related to business creativity. Though
creativity and productivty are equally important to the successful functioning of

the business, enforcing employee creativity is a decidedly more elusive task. The
author illustrates four insightful guidelnes for motvating imagination and boosting a business's creativity quotient.

END NOTES
1. For an in-depth presentation on focus group interviews in general and quantitative applications, see "Conference Focuses on Focus Groups: Guidelines, Reports, and 'the Magic Plaque,"' Marketng News (May 21, 19761, p. 8; Keith K.
Cox, James B. Higginbotham, and John Burton, "Application of Focus Group
lnterviews in Marketing," lournal of Marketing 40, no. 1 (January 1976),
pp.77-80; and Robert D. Hisrich and Michael P. Peters, "Focus Groups: An

CHAPTER

CREATIVITYANDTHE BUSINESS

IDEA

123

nnovative Marketng Research Technique,,. Hospital and Health service

1982), pp. A_Z:t.
classics to Electronics,* Journal of Engineer_
ing Design 6, no. 1 (1996), pp.77-84.
3- 'A discussion of each of these techniques can be found in Robert D. Hisrich
and
Michael P. Peters, Marketing Decisions for New and Mture products (columbus,
oH: charles E. Merrill, 1984), pp. 13146; and Robert D. flisrich, ,,Entrepreneurship
and Intrapreneurship: Methods for creating New companies That Have an fmpact
on the Economic Renaissance of an Area," in Entrepreneurship, tntrapreneurship,
and Venture Capital (Lexington, MA: Lexington Books, 19g6), pp. 77_.104.
f

_ Administration 27, no. 4 (July-August

2. Knut Holt, "Brainstorming-From

4-

For adisrussionof thisaspect,seecharlesH.clark, tdeaua,nagement:Howto

Motivate Creativity and lnnovation (New york: AMACOM, 19g), p. 47.
5. For a discussion of this technique. see J. Geoffrey Rawlinson , Creative Thinking
and Brainstorming (New york: John Wiley & Sons, 1981), pp.124, 126; and
w- E. souder and R. w. ziegler, "A Review of creativity an problem-Solving
Techniques," Research Management 20 (July 1917), p.35.
6- This method is discussed in J. w Haefele, Creativity and lnnovaton (New york:
Van Nostrand Reinhold, 1962), pp. 14547;Sidney J. parnes and Harord F. Harding
(eds.), A source Book for Creative Thinking (New york:
charles scribner.s sons,
1962), pp.3o7-23; and Souder and Ziegrer; "A Review of creativity and probremSolving Techniques," pp. 3442.

7. Afexf. osborn. Applied rmagination (New york: scribner

1957), p.318.

Book companies,

8.
9.

Rawlinson , Creative Thinking, pp. 52-59.

For a thorough discussion of the collective notebook method, see J. w.
Haefele,
Creativity and lnnovation, p. 152.
'10. Parnes and Harding,
A Source Book for Creative Thinking, p. 3Og.
11- For a discussion of this approach, see M. o. Edwards, "stving problems cre-

ativefy," Journal of systems Management 'r7, no- 1 (January-February i 966).

pp.16-24.
12- The procedure for parameter analysis is thoroughly discussed in yao Tzu Li,
David G. Jansson, and Ernest G. cravalho, Techiologica! rnnovation in Education and lndustry (New york: Reinhold, 1980). pp. il_qg, 2j7_86.
13. For some examples of this research and models, see LennyHerron and Harry J.
5apienza, "The Entrepreneur and the Initation of New Venture Launch Activities," Entrepreneurship: Theory and practice (Falr 1992), pp.49-55; c. M. Gaglio
and R. P. Taub. "Entrepreneurs and opportunity Recognition,', Babson Research
conference (May 1992), pp. 13647; L. Busenitz, "Research on Entrepreneurial
Alertness, " Journal of smattBusiness Management 34, no. 4
{1996),'pp. 3s-44;
s. 5hane, "Prior Knowledge and Discovery of Entrepreneuriaiopportunities,,,
organizational science 11. no- 4 (2000), pp.44g-69; Hean Tat Keh, Maw Der
Foo, and Boon chong Lim, "opportunity Evaruation under Risky conditions:
The cognitive process of Entrepren eurs," Entrepreneurship: Thory and practice (winter 2002), pp- i25-48; and Noer J. Lindsay and Juitin craig, ,,A Framework for understanding opportunity Recognition," Journa! of private Equity

(Winter 2002), pp. 13-25.

14. For a detailed description of this
P'.

Peters, Marketing Decisions

process, see Robert D- Hisrich and Michael

New and Mature products(Columbus, oH:

for

Charles E. Merrill, 1991), pp. 157-78.